MACo Supports Expedited Foreclosures, Raises Process Concerns

MACo Associate Director, Natasha Mehu, testified in support with amendments on a pair of bills intend to establish an expedited foreclosure process for homes that are vacant and abandoned. The hearings were held February 14, 2017 before the House Environment and Transportation Committee.

The bills, House Bill 607 Real Property – Vacant and Abandoned Property – Expedited Foreclosure and House Bill 702, “Residential Property – Vacant and Abandoned Property – Expedited Foreclosure,” aim to address the problem of vacant and abandoned properties that often become a source of blight and nuisance for the communities surrounding them.

HB 607 authorizes a county to send notification to a secured party certifying that a property is vacant and abandoned to the best of the sender’s knowledge. A secured party is then required to commence foreclosure action with the court and to maintain the property following this notification.

HB 702 authorizes a secured party to commence a foreclosure action and requires the appropriate county official to verify to the court that the property is vacant and abandoned before the expedited foreclosure process may move forward.

While MACo supported the shared goal of an efficient and effective process to expedite the foreclosure of vacant and abandoned properties, the bills as drafted raised liability and resource concerns. MACo testified in hopes the committee could develop a workable solution.

From MACo testimony:

MACo appreciates the time and effort invested by the sponsor, committee, and fellow stakeholders over the interim to study foreclosures as well as vacant and abandoned properties with the goal of providing local governments additional tools for addressing problem properties. Counties support these efforts but raise these concerns to ensure an effective expedited foreclosure process is developed without unintended consequences that may undermine the benefits.

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Certifying that a property is vacant and abandoned is a highly fact-specific and complex inquiry that raises significant liability concerns. The county may be vulnerable to constitutional claims and other costly and time-consuming lawsuits from an aggrieved party should the property turn out not to be vacant and abandoned. The law generally affords strong protection for personal property rights and counties do not want to run afoul of any longstanding protections.

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Counties are also concerned about the staff time and resources that would need to be dedicated to inspecting the properties in order to verify that they are vacant and abandoned…The mandatory inspections and verifications for the expedited foreclosure process would add a new layer of responsibly to their workloads without additional compensation, stretching already limited resources even thinner.